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The State Bank of Pakistan (SBP) has said that the country's real GDP grew by 3.7 per cent during fiscal year 2011-12 compared with 3.0 per cent in FY11.

The SBP annual report, released on Wednesday, on the state of the economy for the year 2011-12 said the growth was more broad-based compared to FY11 as it was evenly distributed across agriculture, industry and the services sector.

The demand side was more insightful as the growth in FY12 was primarily driven by private consumption, the report said, adding that strong worker remittances, a vibrant informal economy and higher fiscal spending, supported consumption growth during the year.

SBP report said food prices have remained relatively stable during FY12, which helped bring down overall inflation to 11.1 per cent better than the 12.0 per cent projected earlier.

"It was this easing that allowed the central bank to reduce the policy rate by 200 bps (basis points) during the year... This was done to partially revive private sector borrowing, encourage banks to improve their intermediation between private savers and borrowers," the report said.

The report also said strong growth was reported in the remittances area which not only helped narrow the current account deficit, but also contributed to economic activity.

"In overall terms, the external sector has been less worrying than anticipated at the beginning of the year. However, as financial inflows dried up, the burden of financing the current account deficit and external debt has fallen on the country's foreign exchange reserves," the report said.

"Since the size of the fiscal deficit last year was mainly due to one-off factors, we are hoping things will be better this year, the report said.

The central bank also expressed hope that inflows from privatisation and the 3G licences will also be realised in FY13.

The Karachi Stock Exchange market closed higher on Wednesday with higher volume in telecoms on expectations of stronger earnings in the last quarter.